Gold Meets Inflation Hedging: Can WisdomTree's New ETFs Beat The S&P 500?

WisdomTree Inc. (NYSE:WT) has launched two new ETFs designed to help investors cope with inflation, rising interest rates, and volatility.

The two new funds — WisdomTree Efficient TIPS Plus Gold Fund (BATS:GDT) and WisdomTree Efficient Long/Short U.S. Equity Fund (BATS:WTLS) — are trading on the Cboe exchange. Their expense ratios are 0.30% and 0.88%, respectively.

These are WisdomTree’s latest additions to a rapidly expanding list of capital-efficient funds. The firm aims to bring exposure to traditional assets and return-seeking strategies in a single portfolio. This type of fund design has become very popular among investors seeking to achieve more without increasing complexity.

Inflation Hedge Meets Safe-Haven Asset

The GDT fund has been created to help investors address the sticky inflation that has persisted for a long time. The fund combines U.S. Treasury Inflation-Protected Securities (TIPS), which are directly tied to actual inflation, with a strategic allocation to gold. While TIPS are sensitive to inflation data, gold has traditionally been more responsive to changes in inflation expectations, monetary credibility, and policy risks.

In combining the two, WisdomTree seeks to provide a balanced and capital-efficient inflation hedge that can also serve as a diversifier in times of market stress. The strategy enables investors to access the two inflation hedges without having to make separate allocations to bonds and commodities.

Equity Exposure With A Long/Short Twist

WTLS, on the other hand, pursues a different strategy, seeking total return through the combination of broad U.S. large-cap equity market exposure and a dynamic long/short strategy. Instead of substituting for core equity market exposure, the fund is intended to be used in conjunction with it, providing an additional source of potential alpha.

The strategy, as WisdomTree explains, aims to improve equity market returns while still being consistent with typical market benchmarks. This can be ideal for investors who are concerned about straying too far from traditional equity market exposure.

Image: Shutterstock